External Influences - International And Free Trade Flashcards
Define international trade
The exchange of goods across borders
List any three of the five reasons to trade internationally
Variety, economic efficiency, growth, international co-operation, specialisation
Define free trade
Trade without barriers like tariffs and quotas
Why might barriers be put into place
Protect domestic industry, protect infant industry, help correct a balance of payments deficit
Define exchange rate
The value of one currency in terms of another
Define trading bloc
A group of countries in a particular geographical region that protect from imports from outside the bloc
List three advantages of being in a trading bloc
New market for goods, increase business stability, access to raw materials at a lower cost, access to foreign capital, potential economies of scale
List three disadvantages of being in a trading bloc
May affect trade with countries outside the bloc, foreign investors may take over domestic companies, competition may be greater for domestic firms, must follow complicated rules
What support is there for businesses that trade internationally?
Export factoring, export insurance, can make agreement to buy currency at a fixed rate, training for exporters : passport to export
What assistance does the passport to export scheme offer?
Help with identifying target market and market research, help to visit potential markets, a detailed assessment of the businesses readiness to export, an action plan for exporting
How would a UK exporter be affected by a falling exchange rate
They may see an increase in revenue as their goods are cheaper and therefore more competitive abroad
How will a UK importer be affected by a falling exchange rate?
Imports will be more expensive
